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So I've seen quite a few threads on the correct tax treatment for directors' tax returns charged to the company but no-one seems to be answering this basic question:

If your engagement letter is with the company to prepare the directors' SA (which means your contract is with the company, not them) and the directors subsequently sue you for messing up their personal return, how does this play out liability wise?

On the one hand, your engagement is with the company, so it would have to be the company that sues you. Unless there is a duty of care to the directors (which it seems safe to assume there is), in which case you are completely unprotected by your engagement letter as you don't have one directly with them, just the company.

Really interested in your thoughts on how to manage this?

Could you address the letter to both the company and the directors, or specify that the directors, in relation to their personal tax are party to the engagement letter.

I know the gold standard method is to have an engagement letter directly with directors personally, although then it would be more difficult to bill the company for the entire bill such as the case in packaged services.

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You can have a separate contract with the directors, and put the majority of the cost in the contract to the company. Why would there be a problem with that assuming the directors were the sole shareholders?

Thanks for your reply. Yes that is one solution but it kind of involves unpackaging the packaged up service.
For example a firm charges 110 per month to a company for accounts CT vat PAYE and 1 directors return. However you would have to have in the engagement letter, say £100 per month charged to the company and £10 per month charged to the director.
I suppose you could still collect the 110 from the company and then adjust accordingly
It works but is quite inelegant.

I don't imagine this is how in reality most firms handle it but I could be wrong